Are you thinking of leasing an electric van through your business? Whether you’re self-employed, an SME or you manage a large fleet, this article provides the answers to all your questions about transitioning from petrol to an electric van.
In this guide, we explore the process of electric van leasing, its advantages and considerations, and how it works in the UK.
We’ll delve into the tax benefits that come with leasing electric vans – from reduced BIK rates and substantial First Year Allowances, to lower National Insurance contributions, all contributing towards significant cost savings.
We will feature the best electric van leasing companies in the UK, providing an overview of their services and what makes them stand out in the market.
How does electric van leasing work?
Leasing an electric van is a popular option for businesses in the UK that require one or more vans but do not necessarily want to purchase the vehicles outright. Here is a simple step-by-step guide to explain how leasing an electric van typically works:
- Compare Electric Van leasing companies online
Start by comparing the offers of different electric van leasing companies. Look for aspects such as leasing costs, customer reviews, the variety of available electric vans, included services (like maintenance or breakdown coverage), and the reputation of the leasing companies. We have shortlisted a range of leasing companies below.
- Choose Your Electric Van
Businesses first need to select the electric van that meets the needs of the business. This could be a compact electric van for city-based deliveries or a larger electric commercial vehicle for longer-distance hauls.
- Contract Agreement
After choosing the electric van, businesses will agree to a contract with the leasing company. The contract will specify the length of the lease (typically 24 to 60 months), the expected mileage, and the fixed monthly rental payments.
- Monthly Payments
The business will then pay a monthly fee to use the electric van. This fee is calculated based on the cost of the van, the duration of the lease, the estimated residual value of the van at the end of the lease, and the expected mileage.
- Maintenance and Repairs
Depending on the contract, maintenance and repairs of the electric van can either fall under the responsibility of the business or be included in the leasing package offered by the leasing company. Some leasing companies provide maintenance packages as part of the leasing contract.
- Return the Electric Van
At the end of the lease, the business returns the electric van to the leasing company. If the van has more mileage than agreed or there’s damage beyond normal wear and tear, additional charges may apply.
- New Lease Agreement
After returning the electric van, the business can choose to lease another new electric vehicle. This allows businesses to always have a relatively new electric van without worrying about depreciation or reselling the vehicle.
The best electric van leasing sites
We’ve selected DriveElectric, Intelligent Car Leasing, Vanarama, and Select Van Leasing as the best electric van leasing companies based on their industry reputation, customer reviews, range of electric van options, pricing, and additional services they offer.
- Intelligent Car Leasing
- Select Van Leasing
Here’s why we think they are the best electric van leasing companies in the UK:
- DriveElectric are dedicated EV experts, they don’t lease petrol or diesel vans.
- Their team’s hands-on experience with a variety of EV models gives them a superb depth of EV knowledge.
- The holistic approach includes technical support, charging equipment, and driver training.
- Offers an innovative FlexiHire service for short-term van hire.
Intelligent Car Leasing
- Wide range of electric van leasing options for business use.
- Part of the multi-award-winning Fleet Alliance Group, with a solid reputation, industry recognition and credibility.
- Offers thousands of competitive leasing deals on brand-new vehicles via their online platform.
- Strong partnerships with leading finance companies and dealerships.
- Exceptional customer service, a three-time winner of the leasing industry’s benchmark customer service award.
- Vanarama is backed by a reputable company: Autotrader.
- Over 15 years of industry experience establishes Vanarama as a seasoned player in the leasing market.
- The Price Promise guarantee demonstrates their commitment to providing the best market prices.
- Due to their large buying power, they have access to a wide variety of vehicles, including the latest electric vans.
- High customer satisfaction is evidenced by the 96% recommendation rate from their clients.
Select Van Leasing
- Extensive range of electric van options, including small to large vans, versatile pick-ups, and electric vans.
- Strong relationships with manufacturers and funding partners provide competitive pricing.
- Excellent customer service and after-sales support.
- Nationwide service with appointed representatives across the country.
- Positive reputation, with a 5-star rating on Trustpilot
However, it’s important to note that these are not the only options available. There are numerous electric van leasing companies in the UK. We encourage you to conduct thorough research, compare different companies, and seek professional advice before making a final decision.
It’s crucial to understand the terms of any lease agreement thoroughly before committing, as well as any potential tax implications or benefits.
What are the tax benefits of leasing an electric van?
Leasing an electric van in the UK can bring several tax benefits to businesses:
- Zero Benefit-In-Kind (BIK) Rate
Electric Vans have a 0% Benefit-In-Kind (BIK) rate, which increases only marginally over the years. This means that company van drivers who use electric vans pay significantly less in taxes compared to drivers who use traditional vans.
- 100% First Year Allowance
Businesses can deduct the full cost of an electric van from their pre-tax profits in the first year. This is known as the First Year Allowance (FYA), and it can lead to substantial tax savings.
- No Vehicle Excise Duty (VED or Road Tax)
Electric vans are exempt from road tax, because they produce zero emissions.
- Salary Sacrifice Schemes
Salary sacrifice schemes are employee benefit programs where a portion of a pre-tax salary is sacrificed to lease an electric van. The best electric salary sacrifice schemes take all the admin off your hands, and provide tax and National Insurance savings, making the leasing of electric vans easier and more affordable. They often include maintenance, electric vehicle insurance, and sometimes even charging facilities, beyond the tax advantages, there are a number of pros and cons to salary sacrifice schemes that you should familiarize yourself with before applying.
- Zero or Reduced Congestion Charges
Electric vans are also exempt from congestion charges in certain areas such as London’s Congestion Charge Zone, potentially leading to additional savings for businesses operating in these areas.
- Lower National Insurance Contributions (NIC)
As the BIK rate for electric vehicles is much lower, businesses will also pay lower National Insurance contributions.
What are the benefits of switching from a petrol to an electric van?
There are plenty of benefits for businesses looking to use electric vans instead of petrol, some obvious and some not so obvious, let’s take a look:
Lower maintenance costs
Electric Vans have fewer moving mechanical parts and therefore the cost of maintaining the vehicle is considered to be less than that of a petrol or diesel van.
Lower fuel costs
Electricity is generally cheaper than petrol or diesel, so there’s likely to be a substantial saving on fuel!
Reducing air and noise pollution
Air pollution is an obvious benefit of switching to an Electric Van, but what about noise pollution? Electric Vans are much quieter than petrol vans, if you live in a residential area your neighbours may be grateful for less noise.
Using EVs for business demonstrates to customers and employees that you are environmentally conscious.
No congestion charge if you drive in London
This can save you £15 a day if you need to work in central London.
You can claim 100% of the cost of an electric van in the first year.
No Benefit in Kind (BIK) to pay
Unlike electric company cars, electric company vans have a zero Benefit in Kind rate, provided the van is used entirely for business purposes.
The Plug-in Van Grant provides a discount of up to £5,000 for eligible Vans. There are further OZEV grants available to businesses, the Workplace Charging Scheme provide businesses with access to funding to install EV chargers on their business premises.
Are there any potential downsides to getting an electric van?
We have looked at the benefits of electric vans, and now let’s look at the potential downsides that you should consider before you make the switch from petrol to electric.
This is a critical consideration for van owners that travel long distances, Electric vans will have a shorter range than a petrol car.
Access to charging points
The UK EV charging infrastructure is still catching up to the demand for EVs which makes public charging a less convenient option than filling a petrol van at a petrol station. Businesses can install EV charge points on-site and rely less on the use of public charge points.
Higher purchase price
Electric vans are still more expensive than petrol or diesel alternatives.
There is an increasing number of electric vans on the UK market, but still, there’s less range and choice when compared to petrol or diesel options.
What is the Plug-in Van Grant (PIVG)?
The Plug-in Van Grant (PIVG) is one of many grants issued by OZEV to encourage the adoption of electric vehicles across the UK.
The Plug-in Van Grant provides electric van owners with a grant of up to 35% of the purchase price of the vehicle, the amount of funding given differs between small and large electric vans.
Plug-in van grants for small electric vans
A small van is eligible for a maximum grant of up to £2,500, provided they meet the following criteria:
- Emmit less than 50g/km CO2
- Have an electric-only range of over 60 miles
- Weigh less than 2,500kg
Plug-in van grants for large electric vans
A large van is eligible for a maximum grant of up to £5,000, provided they meet the following criteria:
- Emmit less than 50g/km CO2
- Have an electric-only range of over 60 miles
- Weigh between 2,500kg and 4,250kg
Anything bigger than 2,500 is classified as an electric HGV.
How do I claim my Plug-in Van (PIVG) electric van grant?
Unlike other OZEV grants for chargers or infrastructure, there is no need to apply for the Plug-in Van Grant (PIVG). When you purchase the van the discount will be applied at the time of purchase by the dealership.
The discount only applies to the list price of that vehicle, so if you decide to add any optional customisation to the van, this part of the cost will not qualify for the discount.
Do hybrid vans qualify for the Plug-in Van Grant (PIVG)?
Some types of hybrid vans may qualify for the Plug-in Van Grant, but they need to meet the HMRC threshold of emitting less than 50g/km CO2 and have an electric-only range of over 60 miles.
Is there tax-free mileage with an electric van?
There is tax-free mileage in the UK for electric vans. The current tax-free electric mileage rate is 9p, so this means that self-employed van users or businesses can claim back this amount for every business mile driven in an electric van.
What’s the current Benefit in Kind (BIK) rate for an electric van?
There is no benefit in kind (BIK) rate payable for any company van that is zero emission (therefore not hybrid, pure EV). This is significantly less than petrol and diesel vans, which currently sit at 20%.
What are the costs of maintaining an electric van?
Electric Vans have fewer mechanical parts than their petrol counterparts, so the ongoing maintenance costs should be less than a petrol or diesel van. However, the most complex component of an electric vehicle is the battery; if something goes wrong, the replacement cost could be significant.
Can I install an electric van charger at my business premises?
The government subsidise the cost of installing a workplace charger.
It is possible to install an electric van charger at your business premises, in fact, there are government grants in place to help companies cover the cost of installation. The workplace charging scheme and the EV infrastructure grant both provide funding towards the installation of electric van chargers.
If you have a large fleet and want to install rapid chargers, you may need to upgrade the electricity supply to 3-phase in order to facilitate the power demands of fast charging.
Are there Government restrictions on using electric vans for business?
There are no specific Government restrictions on using electric vans for business. In fact, the UK Government is actively encouraging the uptake of electric vans via various OZEV grant schemes. They are continuing to encourage the uptake of electric vans as they try to meet UK targets to reduce carbon emissions and improve air quality.
Do electric vans pay road tax?
Electric vans do not currently pay road tax and will not do so until 2025. After 2025 the Expensive Car Supplement exemption that covers all EVs will end and electric vans will be liable to pay road tax. The tax payable will likely be far less than petrol and diesel vehicles, keep an eye on the government guide to electric van VED for more details about what tax electric vans are likely to pay.
How far can an electric van go on a full charge?
The potential range of an electric van varies from model to model and will be clearly available as part of the specification of each model. Here are a number of options currently available in the UK:
|Electric Van model||Range in miles|
|Renault Zoe Van||245|
|VW ID. Buzz||205|
|Renault Kangoo E-Tech||186|
Real-world ranges can vary depending on several factors, including the driving conditions, the weight of the load that the van is transporting, the state of the battery and the way the driver handles the vehicle.
Will electric vans get cheaper?
It is most likely that electric vans will go down in price and get cheaper in the future, there are 3 potential reasons why the costs will come down:
- Battery technology will cost less over time and this will impact the cost of all types of EV
- Over time new manufacturers will enter the electric van market and with increased supply, the cost of electric vans is likely to fall further
- The government is going to continue encouraging the uptake of EVs and so we can expect grants like the Plug-in Van Grant (PIVG) to continue for the foreseeable future
The final word on leasing an electric van through a business
Leasing an electric van for your business in the UK offers significant tax benefits, and cost savings and that’s before we consider the environmental benefits!
The leasing process for electric vans is straightforward and flexible, allowing businesses to select a van that best suits their needs and budget without the hefty upfront costs of purchasing. Moreover, the tax benefits associated with electric van leasing, such as the 0% Benefit-In-Kind (BIK) rate, 100% First Year Allowance, lower National Insurance contributions, zero Vehicle Excise Duty, and reduced or zero congestion charges, further enhance its cost-effectiveness.
Additionally, the ease of comparing leasing options online allows businesses to find the best van for their needs. Our best picks for electric van leasing companies are:
- DriveElectric stands out for its comprehensive EV knowledge, technical support, and driver training.
- Intelligent Car Leasing offers impressive customer service and a wide range of vehicles
- Vanarama is known for its Price Promise guarantee and positive customer experiences
- Select Van Leasing with its extensive vehicle options and high customer review ratings, is a solid choice for businesses of all sizes.
However, it’s crucial for businesses to conduct thorough research, as these are not the only companies in the electric van leasing sector. The most suitable choice will depend on the specific requirements and budget of your business.
Before you take the plunge and lease an electric van, consider the impact of the reduced range of electric vans and the accessibility of charging points, ensuring the cost savings stack up against any inconvenience to a work routine.
The tax savings and environmental benefits are clear, but if an electric van restricts your ability to trade then you might want to consider if leasing a petrol or diesel van would make more sense.
Ready to dive even deeper...
John is the Editor and Spokesperson for Electric Car Guide.
With over 20 years of writing experience, he has written for titles such as City AM, FE News and NerdWallet.com, covering various automotive and personal finance topics.
John’s market commentary has been covered by the likes of The Express, The Independent, Yahoo Finance and The Evening Standard.